Finland Times

Minister for International Development Heidi Hautala ,Photo Lehtikuva

The government on Thursday decided to exempt some of the debts owed by Myanmar as a part of its cooperation for the development activities of the country, said an official press release.

 

The decision will sent to the President of the Republic for approval on Friday."This debt relief is an important part of Finland's support for Myanmar's development. The country has in many ways proceeded in a positive direction, and naturally I hope this will continue,” Minister for International Development, Heidi Hautala said.

 

She said in addition to the debt relief, Finland is currently planning to initiate other development cooperation with Myanmar. “We pay particular attention to the promotion of the peace process and the advancement of good governance and the rule of law," said the minister.

 

The debt relief concerns the partial cancellation of a development credit of 25 million Finnish marks (about 4.2 million euros), granted in 1982. The agreement paper will be signed at the turn of September-October in Naypyidaw, Myanmar.

 

The intention is to cancel 50 per cent of the outstanding principal and interest accumulated on the credit up to the end of 2012. This means a cancellation of about 2.5 million euros. The rest of the debt is rescheduled for repayment over 15 years so that the first seven years constitute a grace period. The first tranche to be cancelled has been entered into the State Supplementary Budget for 2013. 

 

The intention is to obtain Parliament's approval for the second tranche in connection with the debate on the Budget for 2014.

 

The debt relief is based on the cooperation agreement concerning the reorganisation of Myanmar's bilateral external debts, which Finland signed at the Paris Club in January 2013. The Paris

 

Club is an informal group of creditors which works in cooperation with the International Monetary Fund and the World Bank. In the Club, creditor governments agree on debt rescheduling with a debtor country that is unable to meet its payments.

 

After Afghanistan, Myanmar is the second poorest country in Asia.Extreme poverty is common, especially in the countryside. In spring 2011, after decades of military rule, Myanmar began to move towards democratic civilian government, and the country is returning to the international community. 

 

Despite the democratic reforms and the improvement of the human rights situation, the country still has many problems. In consequence, the need for development aid is great.